Distilled Spirits Council 2014 Industry Review

Transcription

1 Distilled Spirits Council 2014 Industry Review New York City February 3, #USspirits

2 Distilled Spirits: Steady U.S. Growth in 2014 Diversity, Innovation, Quality Drive U.S. Market Results 2014 Economic Overview: Volume growth: up 2.2% Revenue growth: up 4.0% Market share up 0.5 points Total market share gain up 6.4 points since 2000 Total supplier revenue increased from $11.7 billion in 2000 to $23.1 billion in 2014 Market share gains tied to product innovation & improved access 2

3 Spirits Market Share Spirits Market Share Revenue Up 6.4 Points Since 2000, Worth $4.2 Billion 36% 35% 34% 33% 32% 32.1% 33.1% 33.0% 33.1% 32.9% 33.3% 34.1% 34.3% 34.7% 35.2% 31% 30% 29% 28.7% 28% 27% 26% Source: Beverage Information Group Handbooks, Company Financial Reports, DISCUS Estimates 3

4 Millions Fifth Straight Year of Record Exports Total exports surpassed $1.56 billion; up 3.7% Bourbon/Tennessee Whiskey exports topped $1.02 billion Growth substantial in spite of stronger dollar $1.56 Billion (P) +3.7% 4

5 Critical Progress Continues on Social Responsibility 2014 Federal Data: Underage drinking continued decline to record low Binge drinking by teens continued long-term decline to record low Alcohol-impaired driving fatalities decreased 2.5 percent from Public-private partnerships contribute to the progress 5

6 Steady Growth and Record Exports 2014 Contributing Factors: A continued fascination with American Whiskeys in U.S. & abroad Innovation in flavors especially flavored whiskeys Premiumization continues to interest consumers Improved regulatory and tax environment Prohibition of Sunday liquor sales is antiquated State legislatures continued to show hospitality tax restraint U.S. market modernization trend expands access and convenience Small distiller growth expands grassroots & category consumer interest From 92 in 2010 to over 700 in leading small distillers in 31 states have joined DISCUS as affiliate members Virginia distilleries ask Gov. Terry McAuliffe to pull back on plan to raise liquor prices 6

7 Seeds for Growth: 2014 U.S. Market Access Improvements Last Election Day alcohol sales ban repealed in South Carolina Spirits tastings expansions in: CA, ID, ME, MS, OH Tastings laws key to premiumization 46 states now allow some form of spirits tastings Local alcohol elections continue trend of modernization across nation TX: 64 out of 81 wet-dry alcohol elections passed in 2014 (79%) 602 out of 754 alcohol elections have passed in TX since 2004 (80%) Local option on- and off-premise Sunday sales trend spreads GA: 6 more off-premise Sunday sales elections passed in 2014 Sunday brunch crowd more localities vote wet Sundays for restaurants Since 2002, 16 states and DC have passed Sunday sales for total of 39 states East Texans Approve Alcohol Sales on Election Night 7

8 2014 U.S. State Hospitality Tax Scorecard Major tax threats defeated in 11 out of 11 states AL, HI, MA, MS, NM, NC, NY, OH, PA, VA, WV 2014 very low tax threat year Election year concerns may have affected legislators Hospitality Tax message continues to resonate with policymakers Defeated 348 out of 377 major tax threats since 2001 (92%) Municipal tax threats continue to challenge industry Montgomery (AL), Cuyahoga County (OH), NYC, Boston, New Mexico localities Booze price hike irks Va. consumers, restaurants

9 2014/2015 Trends & Developments States and localities increasingly seek to modernize outdated alcohol laws Control states generally seeking to increase outlets Growth factors: convenience/hospitality job growth/tax revenue Increasing grocery interest in spirits sales DISCUS opposes wine-only in grocery store Presently 27 states permit grocery sales of spirits Privatization debate continues in several Control states DISCUS neutral on privatization but will engage any serious effort Outgrowth of modernization trend Editorial: Liquor privatization will return, and cost-conscious drinkers should be glad 9

10 2014/2015 Trends & Developments Tech advances drive sales through improved consumer convenience/experience Advances provide sharp contrast to Prohibition-era laws Apps such as Drizly/Minibar highlight consumer demand for convenience Cocktail apps and social media engagement Innovation, premiumization and local distillation continue 10

11 Industry Economic Review 2014 David Ozgo SVP, Economic & Strategic Analysis 11

12 Economic Review Industry growth Market share Growth by price segment Flavored whiskey impact on the market Small distiller growth year olds and economic growth: an opportunity Category performance 12

13 Supplier Gross Rev (Bil.) U.S. Spirits Supplier Revenues Up 4.0% to $23.1B $900 Million Gain $11.7 $16.0 $17.2 $18.2 $18.7 $18.7 $19.2 $20.4 $21.3 $22.2 $23.1 Source: DISCUS MSDB 13

14 U.S. Volume Up 2.2% in 2014 Up 4.4 Million to 210 Million Cases Liter Case Shipments (Mil.) % 2.7% 4.1% 2.2% 1.7% 1.4% 2.0% 2.9% 3.0% 1.9% 2.2% Source: DISCUS MSDB 14

15 Spirits Market Share Spirits Market Share Revenue Up 6.4 Points Since 2000, Worth $4.2 Billion 36% 35% 34% 33% 32% 32.1% 33.1% 33.0% 33.1% 32.9% 33.3% 34.1% 34.3% 34.7% 35.2% 31% 30% 29% 28.7% 28% 27% 26% Source: Beverage Information Group Handbooks, Company Financial Reports, DISCUS Estimates 15

16 Spirits Market Share Spirits Market Share Volume Up 5.5 Points Since 2000, Worth 35 Million Cases 34% 33% 32% 31% 30% 29% 28% 27% 26% 25% 24% 23% 22% 21% 20% 27.4% 29.0% 29.3% 29.5% 30.9% 30.2% 29.7% 31.7% 31.9% 32.5% 32.9% Source: Beverage Information Group Handbooks, DISCUS Estimates 16

17 Price Segments Products are segmented on supplier prices Range varies by product category Use market leaders to define segments Average supplier gross revenue per case: Case Revenue Retail Bottle Price Value $50 <$12/bottle at retail Premium $100 $12 - $18/bottle at retail High End $165 $18 - $30/bottle at retail Super Premium $250 $30+/bottle at retail 17

18 Volume Share by Price Category Share of U.S. Spirits Volume 19.6% 41.1M 8.4% 17.8M 35.7% 75.0M % - Industry volume in price category M millions of 9-Liter cases in price category 36.3% 76.3M Source: DISCUS MSDB Value Premium High End Super Premium 18

19 Revenue by Price Category U.S. Supplier Gross Revenues $4.6B 19.7% $4.0B 17.4% % - Industry revenue in price category B Gross revenue in price category, billions Source: DISCUS MSDB $7.0B 30.1% $7.6B 32.8% Value Premium High End Super Premium 19

20 Volume Growth by Price Segment % 5.0% 4.0% 3.0% 5.8% 5.1% 2.0% 3.1% 1.0% 0.0% -1.0% -1.3% -2.0% Value Source: DISCUS MSDB Premium High End Super Premium 20

21 Incremental Supplier Shipments (000, 9-Liter Cases) Volume Growth by Price Segment 4.4 Million New Cases in ,268 2, (952) Source: DISCUS MSDB Value Premium High End Super Premium 21

22 Incremental Supplier Revenues (millions) Revenue Growth by Price Segment $900 Million in New Supplier Revenue $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 -$50 ($31) $145 $433 $351 Value Premium High End Super Premium Source: DISCUS MSDB 22

23 21 34 Y/Os and Weekly Earnings = Year Olds 35+ Source: Derived from Bureau of Labor Statistics Current Population Survey 23

24 Annual Earnings (Billions) Significant Growth Opportunity $1,350 Estimated Earnings Y/Os $1,300 $1,250 $1,200 $155 B $1,150 $1,100 $1,050 $1, Source: Derived from Bureau of Labor Statistics Current Population Survey Earnings at 2007 Level Actual 24

25 Flavored Spirits Market Liter Cases Flavored Market Total 24.6 M Total Spirits Market 210.2M 6.6 M 5.0 M 13.0 M Vodka Rum Whiskey Source: DISCUS MSDB 25

26 9-Liter Cases Growth in Flavored Segments , M 2, M 2,000 1,500 1, (900K) - (500) (1,000) Source: DISCUS MSDB Vodka/Rum Whiskey All Flavors 26

27 Small Distillers Consumer interest in spirits continues to create opportunities for small distillers Many entering whiskey category 712 distillers < 50k cases, (avg. of 3k) 17 distillers > 50k < 100k cases (avg. 80k) Total volume +/- 3.5 million cases Up from 700k in % share of spirits market by volume Products tend to be at higher price points, so higher share by revenue likely higher Est. supplier revenues of $400-$450 million 27

28 9-Liter Cases (millions) Whiskey: A Strong Sales Driver All Whiskeys CAGR 1.1% 1.7% 3.8% CAGR 0.2% 6.2% 7.3% Source: Beverage Information Group Handbooks, DISCUS MSDB 28

29 Bourbon/Tennessee Whiskey Volume up 7.4% to 19.4M Cases (+1.3M cases) Revenues up 9.6% to $2.7 B (+$230M) Strength across all price categories Value vol. up 4.7% (3.1M), rev. up 5.5% to $181M Premium vol. up 8.8% (5.5M), rev. up 10.1% to $566 High End vol. up 5.7% (9.2M), rev. up 8.1% to $1.6B Super vol. up 19.2% (1.5M), rev. up 19.2% to $325 Growth in both flavored and traditional products Traditional products grew 1.2M Flavored products grew 140K 29

30 Irish, Single Malt Scotch & Blended Another strong year for Irish Whiskey Volume up 9.1% to 2.8M cases Revenue up 10.7% to $550M Concentrated in High End and Super Premium Single Malt Scotch aficionados keep category growing volumes up 6.4% to 1.9M cases Revenues up 9.2% to $645M Blended Whiskey up 42% to 8.7M cases Growth driven by flavored products 30

31 Other Category Highlights Tequila volumes up 5.0%, revenue up 4.0% Growth concentrated in Super Premium Cognac volumes11.7%, revenues up 15.4% Fast Super Premium growth Vodka volumes up 1.6% (66.9M), revenues up 3.3% Growth primarily in High End & Super Premium Flavor down, but traditional up 3.7% (53.9M cases) 31

32 Summary Volume/revenue Supplier revenue up 4.0% to $23.1B Supplier volume up 2.2% to 210M 9-liter cases Bourbon/Tennessee significant growth driver along with Flavored Whiskey, Irish, Tequila and Cognac Continued to increase market share gains 34.7% revenue market share, 32.5% volume market share 32

33 International Trade Update Christine LoCascio SVP, International Issues & Trade 33

34 U.S. Beverage Alcohol Exports (in millions of U.S. dollars) $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 +3.7% (P) Spirits Wine Beer 34

35 Millions U.S. Whiskeys Continue to Drive Record Spirits Exports Whiskeys Account for 70% of Total U.S. Exports $1.56 Billion +3.7% $1.02 Billion All U.S. Spirits Bourbon and Tennessee Whiskey OTHER whiskeys (P) Source: U.S. Department of Commerce, Compiled by U.S. International Trade Commission (FAS value Free Alongside Ship is the value of exports at the U.S. port, based on transaction price including inland freight, insurance and other charges.) 35

36 Top Ten U.S. Spirits Export Markets Country 2004 Value (millions of USD) 2014 Projected Value (millions of USD) % growth since 2004 Canada % UK % Germany % Australia % France % Japan % Spain % Netherlands % Mexico % Singapore % Source: U.S. Department of Commerce, Compiled by U.S. International Trade Commission (FAS Value) (FAS value Free Alongside Ship is the value of exports at the U.S. port, based on transaction price including inland freight, insurance and other charges.) 36

37 2014 Top Six Projected Export Growth Markets By Dollar Value Growth (millions) 2014 Projected Total Value (millions) United Kingdom +$16.7 $177.6 Spain +$14.1 $82.3 Singapore +$8.6 $31.6 Brazil +$6.4 $9.5 Poland +$6.1 $22.0 Chile +$5.0 $17.1 By Percentage * Percentage Growth 2014 Projected Total Value (millions) Brazil % $9.5 Dominican Republic +75.8% $10.8 Bahamas +49.7% $9.0 Israel +43% $6.3 United Arab Emirates +41.6% $16.1 Panama +40.2% $15.6 *Among countries whose U.S. imports exceed $5 million. 37

38 $35.0 Emerging Export Markets Experience Substantial Growth (Projected) 1336% $30.0 $ % 340% $20.0 $15.0 $10.0 $ % 314% 4900% 374% 1167% 310% 1121% 800% (P) 332% 875% $0.0 *DISCUS-conducted U.S. spirits promotions Source: U.S. Department of Commerce Compiled by U.S. International Trade Commission (FAS Value) 38

39 DISCUS/USDA Partnership Promotes American Spirits Export Growth Promotions in 16 markets since 2005: China, Russia, Brazil, India, Hong Kong, Korea, Thailand, Vietnam, Singapore, Chile, Bulgaria, Romania, Czech Republic, Germany, Austria & Colombia 39

40 Trade Negotiations Provide Significant Opportunities to Expand U.S. Exports Trans-Pacific Partnership U.S. trade agreement with Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam May conclude negotiations in early 2015 Trans-Atlantic Trade and Investment Partnership U.S.-EU trade agreement Opportunity to address non-trade barriers Trade Promotion Authority Legislation Provides President authority to submit agreements to Congress for up or down vote (no amendments) Eliminate and prevent barriers to trade Labeling, standards, import policies, discriminatory taxes 40

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